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  • The dollar remained near six-month highs against the yen on Friday.
  • Strong economic data decreased the likelihood of Federal Reserve rate cuts.
  • Japan experienced its slowest export growth in over two years in April.

Today’s USD/JPY price analysis is bullish. On Friday, the dollar remained near six-month highs against the yen. The growing optimism regarding a potential resolution in US debt ceiling talks and the release of strong economic data decreased the likelihood of Fed rate cuts this year. 

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The dollar index hit its highest level in two months. Over the past two weeks alone, it has climbed by nearly 2.5%. 

Japan experienced its slowest export growth in over two years in April, primarily due to declining shipments bound for China. According to a Ministry of Finance report on Thursday, exports rose by 2.6% compared to last year. 

This growth rate fell short of the 3.0% increase economists had anticipated, representing a slowdown from the 4.3% rise recorded in March. It also marked the weakest expansion since February 2021, when exports declined by 4.5%.

Japan’s economy, ranked third-largest globally, emerged from a recession in the first quarter. However, the sluggishness in exports is exerting pressure on factory activity and hindering a broader recovery.

Since the February 2021 decline, exports have registered monthly growth, aided in part by a weaker yen that has enhanced the competitiveness of Japanese products. However, the gross domestic product (GDP) data for January-March on Wednesday revealed a 4.2% export slump. This marked the first quarterly decline in 18 months.

USD/JPY key events today

All focus today will be on the Fed Chair Jerome Powell. His speech will likely contain clues on the next step in the Fed’s monetary tightening campaign.

USD/JPY technical price analysis: Beas to retest 137.75

USD/JPY technical price analysis
USD/JPY technical price chart

USD/JPY is in a developed uptrend, looking at the 4-hour chart. The bullish move has been steep with shallow pullbacks. Indicators on the screen also show strong bullish momentum, with the RSI well above 50 and the 30-SMA trading below the price.

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However, the price is pulling back after such a steep move. This pullback might retest the 137.75 support level before the uptrend continues. The next stop for bulls will likely be at the 139.00 resistance.

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